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The New Zealand dollar fell initially during the day on Tuesday, but found enough support near the 0.7035 level to turn around and bounce significantly. By bouncing the way it did, we tested the 0.7080 level above for resistance, and I do believe that we will eventually break above there. However, the New Zealand dollar continues to be very choppy and noisy, as it typically is. I believe that the 0.71 level above will be broken, and that this pair will continue to see buyers. In the meantime, I expect to see consolidation between the 0.7035 level on the bottom, and the 0.7080 region and the top. Given enough time though, like I said, I believe the buyers take over. This will be especially true if commodity markets pick up a little bit of risk appetite going forward.
New Zealand dollar as a barometer
The New Zealand dollar is one of my favorite barometers in the currency market as far as risk appetite is concerned, which can be an expression of not only the commodity markets, but the stock markets in general as the stock markets are considered to be “risky” when it comes to risk appetite barometers. I believe that this market is a “buy on the dips” type of situation, as the Kiwi dollar continues to look healthy. We have dynamic support near the 72 hour exponential moving average as seen on the chart, so I believe that traders are continuing to look at pullbacks as value. The value should continue to be a main theme in this market place as the last couple of weeks have established time and time again. Shorting isn’t a thought into we can break down below the bottom of the consolidation area mentioned previously.

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